for the Year Ended March 31, 2018 and Independent Auditor's Report

EIZO Corporation and Subsidiaries

EIZO Corporation and Subsidiaries
Consolidated Balance Sheet
March 31, 2018

Millions of Yen
2018
2017

ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 13)
Short-term investments (Notes 4 and 13)
Notes and accounts receivable (Note 13):
Trade notes
Trade accounts
Other
Allowance for doubtful receivables
Inventories (Note 5)
Deferred tax assets (Note 9)
Prepaid expenses and other current assets
Total current assets
PROPERTY, PLANT, AND EQUIPMENT:Land
Buildings and structures
Machinery and equipment
Furniture and fixtures
Construction in progress
Total
Accumulated depreciation
Net property, plant, and equipment
INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 4 and 13)
Goodwill
Deferred tax assets (Note 9)
Other assets
Total investments and other assets¥

20,395590¥

24,794
310

Thousands of
U.S. Dollars(Note 1)
2018$

LIABILITIES AND EQUITYCURRENT LIABILITIES:
Short-term bank loans (Notes 6 and 13)
Current portion of long-term debt (Notes 6 and 13)
Accounts payable (Note 13):
Trade accounts
Other
Income taxes payable
Accrued expenses
Other current liabilities

192,406
5,566

207
22,331
198(131 )
24,777
2,264
669

214
16,759420(139 )
24,415
1,861
700

1,953
210,670
1,868(1,236 )
233,745
21,3586,311

71,30069,334

672,641

3,250
15,102
4,930
6,936
392
30,610(18,438 )2,964
14,914
4,715
6,303
75
28,971(17,199 )

30,660142,472
46,50965,434
3,699
288,774(173,944 )

12,172

11,772

114,830

33,071
3,164
200
1,300

31,558
423
226
1,847

311,991
29,8491,887
12,26437,73534,054355,991

Total current liabilities
LONG-TERM LIABILITIES:Long-term debt (Notes 6 and 13)
Liability for retirement benefits (Note 7)
Deferred tax liabilities (Note 9)
Other long-term liabilities
Total long-term liabilities¥ 121,207¥ 115,160

¥

1,958
26

¥

1,797

$

18,472
245

7,620
1,309
1,896
4,514
1,380

7,695
1,811
1,051
4,396
2,515

71,887
12,34917,88742,58513,01818,703

19,265

176,443

29
3,224
6,557
1,172

3,171
6,224
1,219

274
30,41561,858
11,057

10,982

10,614

103,604

4,426
4,314
68,2804,426
4,314
62,95441,75540,698644,151(2,662 )(2,662 )(25,113 )17,507(227 )(116 )

17,039(505 )(285 )

165,160(2,142 )(1,094 )91,52285,281

863,415¥ 121,207¥ 115,160$ 1,143,462

COMMITMENTS AND CONTINGENT LIABILITIES(Notes 12 and 14)
EQUITY (Notes 8 and 16):
Common stock—authorized, 65,000,000 shares;
issued, 22,731,160 shares in 2018 and 2017
Capital surplus
Retained earnings
Treasury stock—at cost, 1,410,536 shares in 2018 and
1,410,460 shares in 2017
Accumulated other comprehensive income:Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Defined retirement benefit plans
Total equity

TOTAL

Millions of Yen
2018
2017

Thousands of
U.S. Dollars(Note 1)
2018

TOTAL

$ 1,143,462

See notes to consolidated financial statements.

-2-

EIZO Corporation and Subsidiaries
Consolidated Statement of Income
Year Ended March 31, 2018

Millions of Yen
2018
2017
NET SALES

Thousands of
U.S. Dollars(Note 1)
2018

¥ 84,058¥ 78,284$ 793,000

57,97353,921546,915

26,08524,363

246,085

SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES (Notes 10 and 11)

17,531

17,330165,387

Operating income

8,554

7,033

80,698

547
(3 )
269

5,160
(28 )
2,538

138

497
(1 )
(482 )
11
48

951

73

8,972

INCOME BEFORE INCOME TAXES

9,505

7,106

89,670

INCOME TAXES (Note 9):
Current
Deferred

2,680(314 )

1,518
(73 )

25,283(2,962 )

2,366

1,445

22,321

7,139

5,661

67,349COST OF SALES
Gross profit

OTHER INCOME (EXPENSES):Interest and dividend income
Interest expense
Foreign exchange gain (loss)—net
Gain on sales of securities (Note 4)
Other—net
Other income—net

Total income taxes
NET INCOME
NET INCOME ATTRIBUTABLE TO OWNERS OF
THE PARENT

¥

7,139

¥

5,661

Yen
PER SHARE OF COMMON STOCK (Note 2.q):
Basic net income
Cash dividends applicable to the year

¥ 334.82
85.00

See notes to consolidated financial statements.

-3-

1,302

$

67,349U.S. Dollars¥ 265.54
75.00$ 3.160.80

EIZO Corporation and Subsidiaries
Consolidated Statement of Comprehensive Income
Year Ended March 31, 2018

Millions of Yen
2018
2017
NET INCOME

Thousands of
U.S. Dollars(Note 1)
2018

¥ 7,139¥ 5,661$ 67,349

468
278
169

3,536
(379 )
49

4,415
2,623
1,594

915

3,206

8,632

COMPREHENSIVE INCOME¥ 8,054¥ 8,867$ 75,981

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO—
Owners of the parent¥ 8,054¥ 8,867$ 75,981

OTHER COMPREHENSIVE INCOME (LOSS) (Note 15):
Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Defined retirement benefit plans
Total other comprehensive income

See notes to consolidated financial statements.

-4-

EIZO Corporation and Subsidiaries
Consolidated Statement of Changes in Equity
Year Ended March 31, 2018

BALANCE, APRIL 1, 2016

Thousands
Number of
Shares ofCommonStock
Outstanding

Millions of Yen

CommonStockCapitalSurplusRetained
Earnings

TreasuryStock21,321¥ 4,426¥ 4,314¥ 58,891¥ (2,662 )Net income
Cash dividends, ¥75 per share
Purchase of treasury stock
Net increase in unrealized gain on available-for-sale securities
Net change in foreign currency translation adjustments
Net change in defined retirement benefit plans
BALANCE, MARCH 31, 2017

BALANCE, MARCH 31, 2017

¥ (126 )¥ (334 )

4,426

4,314

62,95449(2,662 )17,039(505 )(285 )

85,281

7,139(1,813 )

7,139(1,813 )
468
169

468
278
169

¥ (116 )¥ 91,522

278

21,321¥ 4,426¥ 4,314¥ 68,280

CommonStockCapitalSurplusRetained
Earnings$ 41,755$ 40,698$ 593,906¥ (2,662 )¥ 17,507¥ (227 )Thousands of U.S. Dollars (Note 1)
Accumulated Other Comprehensive Income
Unrealized
ForeignDefinedGain onCurrency
Retirement
Treasury
Available-forTranslation
Benefit
Stock
Sale Securities
Adjustments
Plans$ (25,113 )$ 160,745$ (4,765 )$ (2,688 )

67,349(17,104 )See notes to consolidated financial statements.

-5-$ 644,151$ 804,538

1,594

4,415
2,623
1,594

$ (1,094 )$ 863,415

2,623$ 40,698

Total
Equity67,349(17,104 )4,415$ 41,755¥ 78,012

3,536(379 )
49(379 )

21,321

Total
Equity5,661(1,598 )3,536

Net income
Cash dividends, $0.80 per share
Purchase of treasury stock
Net increase in unrealized gain on available-for-sale securities
Net change in foreign currency translation adjustments
Net change in defined retirement benefit plans
BALANCE, MARCH 31, 2018

¥ 13,503

5,661(1,598 )Net income
Cash dividends, ¥85 per share
Purchase of treasury stock
Net increase in unrealized gain on available-for-sale securities
Net change in foreign currency translation adjustments
Net change in defined retirement benefit plans
BALANCE, MARCH 31, 2018

Accumulated Other Comprehensive Income
Unrealized
ForeignDefinedGain onCurrency
Retirement
Available-forTranslation
BenefitSale Securities
Adjustments
Plans$ (25,113 )$ 165,160$ (2,142 )EIZO Corporation and Subsidiaries
Consolidated Statement of Cash Flows
Year Ended March 31, 2018

Millions of Yen
2018
2017
OPERATING ACTIVITIES:
Income before income taxes
Adjustments for:
Income taxes—paidDepreciation and amortization
Amortization of goodwill
Provision of allowance for doubtful receivables
Foreign exchange (gain) loss—net
Gain on sales of securities
Changes in assets and liabilities:(Increase) decrease in notes and accounts receivable
Decrease (increase) in inventories(Decrease) increase in accounts payable
Increase in accrued expenses
Increase in liability for retirement benefits
Other—net
Total adjustments

7,106$ 89,670(1,946 )
2,353
252
(10 )
(137 )(1,341 )
2,094
274
16
129
(11 )

(18,358 )22,1982,377(94 )(1,292 )(4,279 )542(584 )
64
203(1,133 )(4,675 )

11(732 )
1,788
279
143
778
3,428

(40,368 )5,113(5,509 )604
1,915(10,690 )(44,104 )

4,830

10,53445,566(2,787 )(156 )(3,028 )(367 )(26,292 )(1,472 )

4

512

38

(1,079 )(2,567 )17(34 )(1,251 )10(10,179 )(24,217 )160(6,568 )(4,158 )(61,962 )(959 )(1,813 )(1,599 )(9,047 )(17,104 )Net cash used in financing activities(2,772 )(1,599 )(26,151 )FOREIGN CURRENCY TRANSLATION ADJUSTMENT ON
CASH AND CASH EQUIVALENTS

111(204 )

1,047

4,573

$ (41,500 )Net cash provided by operating activities
INVESTING ACTIVITIES:
Purchases of property, plant, and equipment
Purchases of software and other long-lived assets
Proceeds from sales of short-term investments andinvestment securities
Purchases of short-term investments and investment
securities
Payment for acquisition of business
Decrease in other assets
Net cash used in investing activities
FINANCING ACTIVITIES:
Repayments of long-term debt
Dividends paid

NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS—(Forward)¥ 9,505¥ (4,399 )-6-¥Thousands of
U.S. Dollars(Note 1)
2018¥

(Continued)

EIZO Corporation and Subsidiaries
Consolidated Statement of Cash Flows
Year Ended March 31, 2018

Millions of Yen
2018
2017
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS—(Forward)¥ (4,399 )

4,573$ (41,500 )

24,794

20,221

233,906

CASH AND CASH EQUIVALENTS, END OF YEAR

¥ 20,395¥ 24,794$ 192,406

INVESTING ACTIVITIES:Payment for purchase of Carina System Co., Ltd. net ofcash acquired¥2,567$24,217

ADDITIONAL INFORMATION:
Assets acquired
Liabilities assumed
Cash paid for the capital
Goodwill

1,431
1,755
2,660
2,984

13,50016,55725,09428,151

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR¥

Thousands of
U.S. Dollars(Note 1)
2018

See notes to consolidated financial statements.

-7-(Concluded)

EIZO Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Year Ended March 31, 2018

1.

BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forthin the Japanese Financial Instruments and Exchange Act and its related accounting regulations and in accordancewith accounting principles generally accepted in Japan ("Japanese GAAP"), which are different in certain respects
as to the application and disclosure requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to
the consolidated financial statements issued domestically in order to present them in a form that is more familiar toreaders outside Japan. In addition, certain reclassifications have been made in the 2017 consolidated financial
statements to conform to the classifications used in 2018.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which EIZO
Corporation (the "Company") is incorporated and operates. The translations of Japanese yen amounts into U.S.
dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of¥106 to $1, the approximate rate of exchange at March 31, 2018. Such translations should not be construed as
representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa.

Consolidation—The consolidated financial statements as of March 31, 2018, include the accounts of theCompany and its 17 (16 in 2017) subsidiaries (together, the "Group").
Under the control concept, those companies in which the Company, directly or indirectly, is able to exercise
control over operations are fully consolidated.
All significant intercompany balances and transactions have been eliminated in consolidation. All material
unrealized profit included in assets resulting from transactions within the Group is also eliminated.

b.

Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial
Statements—Under Accounting Standards Board of Japan ("ASBJ") Practical Issues Task Force No. 18,"Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated
Financial Statements," the accounting policies and procedures applied to a parent company and its subsidiaries
for similar transactions and events under similar circumstances should in principle be unified for the
preparation of the consolidated financial statements. However, financial statements prepared by foreignsubsidiaries in accordance with either International Financial Reporting Standards or generally accepted
accounting principles in the United States of America (Financial Accounting Standards Board AccountingStandards Codification) tentatively may be used for the consolidation process, except for the following items
that should be adjusted in the consolidation process so that net income is accounted for in accordance withJapanese GAAP, unless they are not material: (a) amortization of goodwill; (b) scheduled amortization of
actuarial gain or loss of pensions that has been recorded in equity through other comprehensive income;(c) expensing-8-capitalized development costs of research and development ("R&D"); and (d) cancellation of the fair value
model of accounting for property, plant, and equipment and investment properties and incorporation of thecost model of accounting.
c.

Business Combinations—Business combinations are accounted for using the purchase method.
Acquisition-related costs, such as advisory fees or professional fees, are accounted for as expenses in the
periods in which the costs are incurred. If the initial accounting for a business combination is incomplete by
the end of the reporting period in which the business combination occurs, an acquirer shall report in its
financial statements provisional amounts for the items for which the accounting is incomplete. During themeasurement period, which shall not exceed one year from the acquisition, the acquirer shall retrospectively
adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about
facts and circumstances that existed as of the acquisition date and that would have affected the measurement of
the amounts recognized as of that date. Such adjustments shall be recognized as if the accounting for thebusiness combination had been completed at the acquisition date. The acquirer recognizes any bargain
purchase gain in profit or loss immediately on the acquisition date after reassessing and confirming that all of
the assets acquired and all of the liabilities assumed have been identified after a review of the procedures usedin the purchase price allocation. A parent's ownership interest in a subsidiary might change if the parent
purchases or sells ownership interests in its subsidiary. The carrying amount of noncontrolling interest is
adjusted to reflect the change in the parent's ownership interest in its subsidiary while the parent retains its
controlling interest in its subsidiary. Any difference between the fair value of the consideration received or
paid and the amount by which the noncontrolling interest is adjusted is accounted for as capital surplus as longas the parent retains control over its subsidiary.
During the year ended March 31, 2018, the Company has acquired 100% of the shares of Carina System Co.,
Ltd. For further information, please refer to Note 3.

d.

Cash Equivalents—Cash equivalents are short-term investments that are readily convertible into cash andexposed to insignificant risk of changes in value.
Cash equivalents include time deposits, certificates of deposit, and commercial paper, all of which mature or
become due within three months of the date of acquisition.

e.

Inventories—Inventories are stated at the lower of cost, determined by the average method for finishedproducts and work in process and by the moving-average method for raw materials, or net selling value.

f.

Short-Term Investments and Investment Securities—Short-term investments and investment securities areclassified and accounted for, depending on management's intent, as follows: (1) trading securities, which areheld for the purpose of earning capital gains in the near term, are reported at fair value, and the related
unrealized gains and losses are included in earnings; and (2) available-for-sale securities, which are notclassified as either trading securities or held to maturity debt securities, are reported at fair value, withunrealized gains and losses, net of applicable taxes, reported in a separate component of equity.
Nonmarketable available-for-sale securities are stated at cost determined by the moving-average method.
For other-than-temporary declines in fair value, investment securities are reduced to net realizable value by acharge to income.

-9-

g.

Property, Plant, and Equipment—Property, plant, and equipment are stated at cost. Depreciation of property,
plant, and equipment of the Company and its domestic subsidiaries is computed substantially by the decliningbalance method at rates based on the estimated useful lives of the assets, while the straight-line method isapplied to buildings of the Company and its domestic subsidiaries acquired after April 1, 1998, buildings
improvements and structures acquired on or after April 1, 2016, and all property, plant, and equipment offoreign subsidiaries. The range of useful lives is principally from 15 to 50 years for buildings and structures,from 7 to 10 years for machinery and equipment, and from 2 to 6 years for furniture and fixtures.

h.

Goodwill—Goodwill is amortized over 10 years or less by the straight-line method. Immaterial goodwill may
be charged entirely to income at acquisition. Amortization of goodwill is ¥252 million ($2,377 thousand) and¥274 million for the years ended March 31, 2018 and 2017, respectively.

i.

Long-Lived Assets—The Group reviews its long-lived assets for impairment whenever events or changes incircumstances indicate the carrying amount of an asset or asset group may not be recoverable. An impairment
loss is recognized if the carrying amount of an asset or asset group exceeds the sum of the undiscounted future
cash flows expected to result from the continued use and eventual disposition of the asset or asset group. The
impairment loss would be measured as the amount by which the carrying amount of the asset exceeds its
recoverable amount, which is the higher of the discounted cash flows from the continued use and eventual
disposition of the asset or the net selling price at disposition.

j.

Retirement and Pension Plans—The Company and certain of its domestic subsidiaries have a defined
contribution pension plan and unfunded retirement benefit plans. Other domestic subsidiaries have a defined
benefit pension plan and unfunded retirement benefit plans. Certain foreign subsidiaries have either a defined
contribution plan or defined benefit plan. Additionally, the Company or its subsidiaries may add premium
severance pay.
The Company accounts for the liability for retirement benefits based on the projected benefit obligations andplan assets at the balance sheet date. The projected benefit obligations are attributed to periods on astraight-line basis. Actuarial gains and losses and past service costs that are yet to be recognized in profit orloss are recognized within equity (accumulated other comprehensive income), after adjusting for tax effects
and are recognized in profit or loss over five years, no longer than the expected average remaining service
period of the employees. The discount rate is determined using a single weighted-average discount rate
reflecting the estimated timing and amount of benefit payment.
Retirement benefits to directors and Audit & Supervisory Board members are recorded at the amount thatwould be required if the directors and Audit & Supervisory Board members retired at the consolidated balance
sheet date. In June 2004, the retirement benefit system was abolished and the amount required to be paid at thetime of the abolishment will be paid to directors and Audit & Supervisory Board members upon theirretirement.

k.

R&D Costs—R&D costs are charged to income as incurred.

- 10 -

l.

Software Development Contracts—Revenue from sales of customized software and costs of development of
the customized software should be recognized by the percentage-of-completion method if the outcome of adevelopment contract can be estimated reliably. When total revenue, total costs, and the stage of completion of
the contract at the consolidated balance sheet date can be reliably measured, the outcome of a development
contract can be estimated reliably. If the outcome of a development contract cannot be reliably estimated, thecompleted contract method should be applied. When it is probable that the total costs will exceed total
revenue, an estimated loss on the contract should be immediately recognized by providing for a loss ondevelopment contracts.

m. Income Taxes—The provision for income taxes is computed based on the pretax income included in the
consolidated statement of income. The asset and liability approach is used to recognize deferred tax assets andliabilities for the expected future tax consequences of temporary differences between the carrying amounts andthe tax bases of assets and liabilities. Deferred taxes are measured by applying currently enacted tax laws to
the temporary differences.
The Group files a tax return under the consolidated corporate tax system in Japan, which allows companies tobase tax payments on the combined profits or losses of the parent company and its wholly owned domestic
subsidiaries.
n.

Foreign Currency Transactions—All short-term and long-term monetary receivables and payables
denominated in foreign currencies are translated into Japanese yen at the exchange rates at the consolidatedbalance sheet date. The foreign exchange gains and losses from translation are recognized in the consolidated
statement of income to the extent that they are not hedged by forward exchange contracts.

o.

Foreign Currency Financial Statements—The balance sheet accounts of the foreign subsidiaries aretranslated into Japanese yen at the current exchange rate as of the balance sheet date, except for equity, which
is translated at the historical rate.
Differences arising from such translation were shown as "Foreign currency translation adjustments" underaccumulated other comprehensive income as a separate component of equity.
Revenue and expense accounts of foreign subsidiaries are translated into Japanese yen at the average exchange
rate.

p.

Derivatives—The Group uses derivative financial instruments to manage its exposures to fluctuations inforeign currency exchange rates. Foreign exchange forward contracts are utilized by the Group to reduce
foreign currency exchange rate risks. The Group does not enter into derivatives for trading or speculative
purposes.
Derivative financial instruments are classified and accounted for as follows: all derivatives are recognized aseither assets or liabilities and measured at fair value with gains or losses on derivative transactions recognizedin the consolidated statement of income.

q.

Per Share Information—Basic net income per share is computed by dividing net income attributable tocommon shareholders by the weighted-average number of common shares outstanding for the period.
Cash dividends per share shown in the consolidated statement of income are presented on an accrual basis, andinclude interim dividends paid and year-end dividends to be approved after the consolidated balance sheet
date.

- 11 -

Diluted net income per share of common stock is not disclosed herein because the Company has not issued any
securities that are potentially dilutive for the years ended March 31, 2018 and 2017.
r.

New Accounting Pronouncements—On March 30, 2018, the ASBJ issued ASBJ Statement No. 29,"Accounting Standard for Revenue Recognition," and ASBJ Guidance No. 30, "Implementation Guidance on
Accounting Standard for Revenue Recognition." The core principle of the standard and guidance is that anentity should recognize revenue to depict the transfer of promised goods or services to customers in an amountthat reflects the consideration to which the entity expects to be entitled in exchange for those goods orservices. An entity should recognize revenue in accordance with that core principle by applying the following
steps:
Step 1:
Step 2:
Step 3:
Step 4:
Step 5:

Identify the contract(s) with a customer
Identify the performance obligations in the contract
Determine the transaction price
Allocate the transaction price to the performance obligations in the contract
Recognize revenue when (or as) the entity satisfies a performance obligation

The accounting standard and guidance are effective for annual periods beginning on or after April 1, 2021.
Earlier application is permitted for annual periods beginning on or after April 1, 2018.
The Company expects to apply the accounting standard and guidance for annual periods beginning on or after
April 1, 2022 and is in the process of measuring the effects of applying the accounting standard and guidancein future applicable periods.
3.

BUSINESS COMBINATION
Year Ended March 31, 2018
(Business Combination by Acquisition)a.

Outline of the business combination(1) Name of the acquired company and its business outline
Name of the acquired company:
Business outline:

Carina System Co., Ltd.
Development and sales of software and hardware systems;
research and sales of electronics equipments and opticalequipments; and system integration, system construction,
deployment of consulting business from introduction to operation.

(2) Major reason for the business combination
Established in December 2008, Carina System Co., Ltd. develops hardware and software combined
systems in-house for capturing, distributing, editing, and analyzing content for healthcare andbroadcasting markets. Carina System Co., Ltd. currently holds a considerable market share in video
solutions for operating rooms with an installation record of over 300 hospitals in Japan.

- 12 -

With this acquisition, the Company can apply Carina System Co., Ltd.'s integration know-how, derived
from their in-house research & development and extensive experience in target markets, to its monitor
solutions. This allows the Company to offer even more comprehensive visual technology solutions that
expands its product offerings to cover video and image capture, distribution, and display.
(3) Date of business combination
March 30, 2018(4) Legal form of business combination
Share acquisition in consideration for cash(5) Ratio of voting rights acquired
100%(6) Name of the company after the combination
Same as before the combination(7) Basis for determining the acquirer
It is based on the fact that the Company acquired 100% of voting rights by means of share acquisition inconsideration for cash.
b.

The period for which the operations of the acquired company are included in the consolidated financial
statements
There is no period for which the operations of the acquired company are included in the consolidated financial
statements.

c.

d.

Acquisition cost of the acquired company and related details of each class of consideration

Millions of Yen

Thousands of
U.S. Dollars

Consideration for acquisition—Cash¥ 2,660$ 25,094

Acquisition cost

¥ 2,660$ 25,094

Amount of goodwill incurred, reasons for the goodwill incurred, and the method and period of amortization(1) Amount of goodwill incurred¥2,984 million ($28,151 thousand)(2) Reasons for the goodwill incurred
Goodwill is incurred from expected excess earnings power in the future arising from further businessdevelopment.

- 13 -

(3) Method and period of amortization
The process for distinguishing identifiable assets and liabilities on the date of the above businesscombination is under examination and the purchase price allocation has not yet been completed as ofMarch 31, 2018. Therefore, the amount of goodwill is accounted for on a provisional basis.
e.

The assets acquired and the liabilities assumed at the acquisition date are as follows:

Millions of Yen

Thousands of
U.S. Dollars¥ 1,40229$ 13,226
274

1,431

13,500

705
1,050

6,651
9,906

1,755

16,557¥ (324 )$ (3,057 )Current assets
Noncurrent assets
Total assets acquired
Current liabilities
Noncurrent liabilities
Total liabilities assumed
Net assets acquired
4.

SHORT-TERM INVESTMENTS AND INVESTMENT SECURITIESShort-term investments and investment securities as of March 31, 2018 and 2017, consisted of the following:

Millions of Yen
2018
2017

Thousands of
U.S. Dollars
2018

Short-term investments:
Trust fund investments
Debt securities

¥

290
300

¥

310

$

2,736
2,830

Total

¥

590

¥

310

$

5,566

Investment securities:
Marketable equity securities
Nonmarketable equity securities
Others¥ 32,921
150¥ 31,406
149
3$ 310,576
1,415

Total

¥ 33,071¥ 31,558$ 311,991- 14 -

The cost and aggregate fair value of short-term investments and investment securities at March 31, 2018 and 2017,
were as follows:

March 31, 2018

Millions of Yen
Unrealized
Unrealized
Gains
Losses

Cost

Fair
Value

Securities classified as:
Trading¥

290

Available for sale—
Equity securities¥ 7,823¥ 25,216¥ 118¥ 32,921

Total¥ 7,823¥ 25,216¥ 118¥ 32,921

March 31, 2017
Securities classified as:
Trading¥

Available for sale:
Equity securities
Others¥ 7,0443¥ 24,362¥ 31,406
3

Total¥ 7,047¥ 24,362¥ 31,409

Thousands of U.S. Dollars
Unrealized
Unrealized
Gains
LossesFair
Value

March 31, 2018

Cost

Securities classified as:
Trading

5.

310

$

2,736

Available for sale—
Equity securities$ 73,802$ 237,887$ 1,114$ 310,575

Total$ 73,802$ 237,887$ 1,114$ 310,575

INVENTORIESInventories at March 31, 2018 and 2017, consisted of the following:

Millions of Yen
2018
2017

Thousands of
U.S. Dollars
2018

Finished products
Work in process
Raw materials and supplies¥ 10,280
1,985
12,512¥ 10,284
4,501
9,630

$

Total

¥ 24,777¥ 24,415$ 233,745- 15 -

96,981
18,726
118,038

6.

SHORT-TERM BANK LOANS AND LONG-TERM DEBT
Short-term bank loans at March 31, 2018 and 2017, consisted of notes to banks. The weighted-average annualinterest rate applicable to the short-term bank loans was 0.07% and 0.07% at March 31, 2018 and 2017,
respectively.
Annual maturities of long-term debt, as of March 31, 2018, for the next five years and thereafter were as follows:Year Ending
March 31

7.

Millions of Yen

Thousands of
U.S. Dollars

2019
2020
2021
2022
2023
2024 and thereafter

¥ 26
12
5
8
1
3

$ 245
113
47
75
9
28

Total

¥ 55

$ 517

RETIREMENT AND PENSION PLANS
The Company and certain of its subsidiaries have severance payment plans for employees, directors, and Audit &Supervisory Board members.
Under most circumstances, employees terminating their employment are entitled to retirement benefits determinedbased on the rate of pay at the time of termination, years of service, and certain other factors. Such retirement
benefits are given in the form of a lump-sum severance payment from the Company or from certain subsidiaries andannuity payments from the Company, certain subsidiaries, or a trustee. Employees of the Company or certain
subsidiaries are entitled to larger payments if the termination is involuntary, by retirement at the mandatory
retirement age, by death, or by voluntary retirement at certain specific ages prior to the mandatory retirement age.
(1) The changes in defined benefit obligation for the years ended March 31, 2018 and 2017, were as follows:

Millions of Yen
2018
2017

Thousands of
U.S. Dollars
2018

Balance at beginning of year
Current service cost
Interest cost
Actuarial (gains) losses
Benefits paid
Others¥ 3,994235
19(128 )(97 )124¥ 3,937229
1868(178 )(80 )$ 37,679
2,217
179(1,208 )(915 )
1,171

Balance at end of year

¥ 4,147¥ 3,994$ 39,123- 16 -

(2) The changes in plan assets for the years ended March 31, 2018 and 2017, were as follows:

Millions of Yen
2018
2017

Thousands of
U.S. Dollars
2018

Balance at beginning of year
Expected return on plan assets
Actuarial (losses) gains
Contributions from the employer
Benefits paid
Others

¥

924
24
(9 )
21
(10 )
75

¥ 949
27
4
43
(78 )
(21 )

$ 8,717
226
(85 )
198
(94 )
708

Balance at end of year

¥ 1,025¥ 924$ 9,670(3) A reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined
benefit obligation and plan assets as of March 31, 2018 and 2017, was as follows:

Millions of Yen
2018
2017

Thousands of
U.S. Dollars
2018

Funded defined benefit obligation
Plan assets
Total
Unfunded defined benefit obligation¥ 1,770(1,025 )745
2,377¥ 1,701(924 )
777
2,292$ 16,698(9,670 )7,028
22,425Net liability for defined benefit obligation¥ 3,122¥ 3,069$ 29,453

Millions of Yen
2018
2017

Thousands of
U.S. Dollars
2018

Liability for retirement benefits¥ 3,122¥ 3,069$ 29,453

Net liability for defined benefit obligation¥ 3,122¥ 3,069$ 29,453(4) The components of net periodic benefit costs for the years ended March 31, 2018 and 2017, were as follows:

Millions of Yen
2018
2017

Thousands of
U.S. Dollars
2018

Service cost
Interest cost
Expected return on plan assets
Recognized actuarial losses
Others

¥ 235
19
(24 )
131
71

¥ 229
18
(27 )
115
42

$ 2,217179(226 )
1,236
669

Net periodic benefit costs

¥ 432

¥ 377

$ 4,075- 17 -

(5) Amounts recognized in other comprehensive income (before income tax effect) in respect of defined
retirement benefit plans for the years ended March 31, 2018 and 2017, were as follows:
Thousands of
U.S. Dollars
2018

Millions of Yen
2018
2017
Actuarial gains¥ (191 )¥ (35 )$ (1,802 )Total¥ (191 )¥ (35 )$ (1,802 )(6) Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect ofdefined retirement benefit plans as of March 31, 2018 and 2017, were as follows:
Thousands of
U.S. Dollars
2018

Millions of Yen
2018
2017
Unrecognized actuarial losses

¥ 136

¥ 328

$ 1,283

Total

¥ 136

¥ 328

$ 1,283(7) Plan assetsa.

Components of plan assets
Plan assets as of March 31, 2018 and 2017, consisted of the following:

b.

2018

2017

Debt investments
Equity investments
Cash and cash equivalents
Others

54 %
15
4
27

52 %
15
4
29

Total

100 %

100 %

Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering the long-term rates of return which
are expected currently and in the future from the various components of the plan assets.

(8) Assumptions used for the years ended March 31, 2018 and 2017, are set forth as follows:

Discount rate
Expected rate of return on plan assets

2018

2017

0.1%–1.6%
5.0%

0.2%–1.6%
5.3%

The expected raise rate is based on the index of the raise calculated by age as of March 31, 2013.

- 18 -

(9) Defined contribution plan
The required contribution amounts of the Group for the years ended March 31, 2018 and 2017, were¥223 million ($2,104 thousand) and ¥221 million, respectively.
The liability for retirement benefits at March 31, 2018 and 2017, for directors and Audit & Supervisory Board
members was ¥102 million ($962 thousand).
8.

EQUITYJapanese companies are subject to the Companies Act of Japan (the "Companies Act"). The significant provisions
in the Companies Act that affect financial and accounting matters are summarized below:a.

Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to theyear-end dividend upon resolution at the shareholders' meeting. Additionally, for companies that meet certain
criteria, including (1) having a board of directors, (2) having independent auditors, (3) having an Audit &Supervisory Board, and (4) the term of service of the directors being prescribed as one year rather than thenormal two-year term by its articles of incorporation, the board of directors may declare dividends (except for
dividends-in-kind) at any time during the fiscal year if the company has prescribed so in its articles ofincorporation. With respect to the third condition above, the board of directors of companies with an audit andsupervisory committee (as implemented under the Companies Act effective May 1, 2015) may also declare
dividends at any time because such companies, by their nature, meet the criteria under the Companies Act. The
Company is organized as a company with an audit and supervisory committee, effective June 23, 2016. The
Company meets all the above criteria, and accordingly, the board of directors may declare dividends (except
for dividends-in-kind) at any time during the fiscal year.
The Companies Act permits companies to distribute dividends-in-kind (noncash assets) to shareholders subject
to certain limitations and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the board of directors if thearticles of incorporation of the company so stipulate. The Companies Act provides certain limitations on theamounts available for dividends or the purchase of treasury stock. The limitation is defined as the amountavailable for distribution to the shareholders, but the amount of net assets after dividends must be maintained
at no less than ¥3 million.

b.

Increases/Decreases and Transfer of Common Stock, Reserve, and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve(a component of retained earnings) or as additional paid-in capital (a component of capital surplus), dependingon the equity account charged upon the payment of such dividends, until the aggregate amount of the legal
reserve and additional paid-in capital equals 25% of the common stock. Under the Companies Act, the total
amount of additional paid-in capital and legal reserve may be reversed without limitation. The Companies Act
also provides that common stock, legal reserve, additional paid-in capital, other capital surplus, and retained
earnings can be transferred among the accounts within equity under certain conditions upon resolution of theshareholders.

- 19 -

c.

Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stockby resolution of the board of directors. The amount of treasury stock purchased cannot exceed the amountavailable for distribution to the shareholders, which is determined by a specific formula.
Under the Companies Act, stock acquisition rights are presented as a separate component of equity.
The Companies Act also provides that companies can purchase both treasury stock acquisition rights andtreasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or
deducted directly from stock acquisition rights.

9.

INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes that, in theaggregate, resulted in a normal effective statutory tax rate of approximately 30.7% for the years ended March 31,2018 and 2017.
The tax effects of significant temporary differences and tax loss carryforwards that resulted in deferred tax assets
and liabilities at March 31, 2018 and 2017, are as follows:

Millions of Yen
2018
2017

Thousands of
U.S. Dollars
2018

Deferred tax assets:
Inventories
Liability for retirement benefits
Tax loss carryforwards
Accrued expenses
Other
Less valuation allowance¥ 1,052
788
955
830
1,774
(1,861 )

Total

3,538

3,265

33,377(7,592 )(84 )(7,324 )(113 )(71,623 )(792 )(7,676 )(7,437 )(72,415 )¥ (4,138 )¥ (4,172 )$ (39,038 )Deferred tax liabilities:
Unrealized gain on available-for-sale securities
Other
Total
Net deferred tax liabilities- 20 -

¥

772
810
1,067
798
1,713
(1,895 )

$

9,925
7,434
9,009
7,830
16,736(17,557 )Deferred tax assets and liabilities were included in the consolidated balance sheet as follows:

Millions of Yen
2018
2017

Thousands of
U.S. Dollars
2018

Current assets—deferred tax assets
Investments and other assets—deferred tax assets
Current liabilities—other current liabilities
Long-term liabilities—deferred tax liabilities¥ 2,264200(45 )(6,557 )¥ 1,861226(35 )(6,224 )$ 21,358
1,887(425 )(61,858 )Net deferred tax liabilities¥ (4,138 )¥ (4,172 )$ (39,038 )A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in theaccompanying consolidated statement of income for the year ended March 31, 2018, with the corresponding figuresfor 2017, is as follows:
2018

2017

Normal effective statutory tax rate
Tax credit for research expenses
Tax credit for investments
Decrease in valuation
Other—net

30.7 %
(4.8)
(1.2)
0.2

30.7 %
(5.4)
(1.9)
(2.2)
(0.9)

Actual effective tax rate

24.9 %

20.3 %At March 31, 2018, certain subsidiaries have tax loss carryforwards aggregating approximately ¥3,753 million($35,406 thousand) that are available to be offset against taxable income of such subsidiaries in future years. Thesetax loss carryforwards, if not utilized, will expire as follows:Year Ending
March 31

Millions of Yen

Thousands of
U.S. Dollars

2022 and thereafter¥ 3,753$ 35,406

Total¥ 3,753$ 35,406

New tax reform laws enacted in 2017 in the United States of America changed the normal effective statutory tax
rate for the fiscal year beginning on or after April 1, 2018, from approximately 35% to 21%. The effect of thechange was insignificant, and thus, there is no requirement to disclose such geographic information.

- 21 -

10.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the years ended March 31, 2018 and 2017, principally consisted of
the following:

Millions of Yen
2018
2017
Salaries for employees
Provision for bonuses
Retirement benefit expenses
Provision for product warranty liabilities
R&D expenses
Provision for loss on recycling of monitors
Provision of allowance for doubtful accounts
11.

¥ 5,418
392
341
432
5,481
(76 )
(9 )

¥ 5,288
372
303
401
5,330
(93 )
43

Thousands of
U.S. Dollars
2018$ 51,113
3,698
3,217
4,075
51,708(717 )(85 )R&D COSTS
R&D costs charged to income were ¥5,908 million ($55,736 thousand) and ¥5,625 million for the years ended
March 31, 2018 and 2017, respectively.

12.

LEASES
The minimum rental commitments under noncancelable operating leases at March 31, 2018 and 2017, were as
follows:

Millions of Yen
2018
2017

13.

Thousands of
U.S. Dollars
2018

Due within one year
Due after one year

¥ 266
396

¥ 250
488

$ 2,509
3,736

Total

¥ 662

¥ 738

$ 6,245

FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(1) Group Policy for Financial Instruments
The Group uses financial instruments based on its capital expenditure plan. Cash surpluses, if any, are invested
in low-risk financial assets. Derivatives are not used, for speculative purposes, but to manage exposure tofinancial risks as described in (2) below.
(2) Nature and Extent of Risks Arising from Financial Instruments
Receivables such as trade notes and trade accounts are exposed to customer credit risk. Although receivables
in foreign currencies are exposed to the risk of fluctuation in foreign currency exchange rates, the position, netof payables in foreign currencies, is hedged by using forward foreign currency contracts. Short-term
investment and investment securities, mainly equity instruments of customers and suppliers of the Group, debt
securities and funds in trust are exposed to credit risk and the risk of fluctuation in market price and interestrate.

- 22 -

All payment terms of payables, such as trade accounts, are within one year. Although payables in foreign
currencies are exposed to the risk of fluctuation in foreign currency exchange rates, those risks are netted
against the balance of receivables denominated in the same foreign currency, as noted above.
Short-term bank loans are used to hedge the exchange risk for nontrade receivables denominated in foreign
currency. The payment term is within three months after the consolidated balance sheet date. The loans aretraded in foreign currency and have variable interest rates. Thus, they are exposed to the market risk offluctuation in exchange rates and interest rates.
Derivatives mainly include forward foreign currency contracts that are used to manage exposure to risk ofchanges in foreign currency exchange rates of receivables and payables. Please see Note 14 for more details
about derivatives.
(3) Risk Management for Financial Instruments
Credit risk management
Credit risk is the risk of economic loss arising from a counterparty's failure to repay or service debt according
to the contractual terms. The Group manages its credit risk from receivables on the basis of internal guidelines,
which include monitoring of payment terms and balances of major customers by each business administration
department to identify the default risk of customers at an early stage. With respect to debt securities, the Groupmanages its exposure to credit risk by limiting its funding to high credit rating bonds in accordance with in its
internal guidelines. Please see Note 14 for information about derivatives.
The maximum credit risk exposure of financial assets is limited to their carrying amounts as of March 31,
2018.
Market risk management (foreign exchange rate risk and interest rate risk)
Foreign currency trade receivables, payables, and short-term bank loans are exposed to fluctuations in foreign
currency exchange rates. Such foreign exchange rate risk is hedged occasionally by forward foreign currency
contracts.
Marketable and investment securities are managed by monitoring the market values and financial position ofissuers on a regular basis.
The basic policies regarding derivative transactions have been approved by the Chief Financial Officer basedon internal guidelines that prescribe the authority and the limit for each transaction by the corporate treasury
department. Reconciliation of the transactions and balances with customers is made and the transaction data isreported to the Chief Financial Officer on a monthly basis.
Liquidity risk management
Liquidity risk comprises the risk that the Group cannot meet its contractual obligations in full on maturity
dates. The Group manages its liquidity risk by holding an adequate volume of liquid assets along withadequate financial planning by the corporate treasury department.

- 23 -

(4) Concentration of Credit Risk
As of March 31, 2018, 22.7% of total receivables are from specific major customers of the Group.
(5) Fair Values of Financial Instruments
Fair values of financial instruments are based on quoted prices in active markets. If quoted prices are notavailable, other rational valuation techniques are used instead.
(a) Fair value of financial instruments
Millions of Yen
Carrying
AmountMarch 31, 2018

Fair Value

Cash and cash equivalents
Notes and accounts receivable
Allowance for doubtful receivables
Notes and accounts receivable (net)
Short-term investments andinvestment securities¥ 20,395
22,736(131 )
22,605¥ 20,395

33,211

33,211

Total¥ 76,211¥ 76,211

Accounts payable
Short-term bank loans
Long-term debt

¥

7,620
1,958
55

¥

Total

¥

9,633

Derivatives¥

35

22,605

7,620
1,958
56

¥1

¥

9,634

¥1

¥

35

March 31, 2017
Cash and cash equivalents
Notes and accounts receivable
Allowance for doubtful receivables
Notes and accounts receivable (net)
Short-term investments andinvestment securities¥ 24,794
17,393(139 )
17,254¥ 24,794

31,71831,718

Total¥ 73,766¥ 73,766

Accounts payable
Short-term bank loans

¥

¥

Total

¥ 11,303¥ 11,303

Derivatives¥¥- 24 -

9,506
1,797

18

Unrealized
Gain/Loss

17,254

9,506
1,797

18

CarryingAmountMarch 31, 2018

Thousands of U.S. Dollars
Unrealized
Fair Value
Gain/Loss

Cash and cash equivalents
Notes and accounts receivable
Allowance for doubtful receivables
Notes and accounts receivable (net)
Short-term investments andinvestment securities$ 192,406
214,491(1,236 )213,255$ 192,406

313,311

313,311

Total$ 718,972$ 718,972

Accounts payable
Short-term bank loans
Long-term debt$

71,887
18,472
519

$

Total

$

90,878Derivatives$

330

213,255

71,887
18,472528$9$90,887$9$

330

Cash and Cash Equivalents
The carrying values of cash and cash equivalents approximate fair value because of their short maturities.
Notes and Accounts Receivable
The carrying values of notes and accounts receivable approximate fair value because of their short-term
settlement periods. The allowance for doubtful receivables is deducted from notes and accounts
receivable.
Short-Term Investments and Investment Securities
The fair values of short-term investments and investment securities are measured at the quoted market
price of the stock exchange for equity instruments and at the quoted price obtained from financial
institutions for certain debt instruments. Fair value information for the short-term investments andinvestment securities by classification is included in Note 4.
Accounts Payable and Short-Term Bank Loans
The carrying values of accounts payable and short-term bank loans approximate fair value because of
their short-term settlement periods.
Long-Term Debt
The fair values of long-term debt are determined by discounting the cash flows related to the debt at theGroup's assumed corporate borrowing rate.
Derivatives
Fair value information for derivatives is included in Note 14.

- 25 -

(b) Carrying amount of financial instruments whose fair value cannot be reliably determined

Millions of Yen
2018
2017
Investments in equity instruments that do nothave a quoted market price in an active market
Debt securities that do not have a quoted market
price in an active market

¥ 150

¥ 149

300

Thousands of
U.S. Dollars
2018$ 1,4152,830(6) Maturity Analysis for Financial Assets and Securities with Contractual Maturities

March 31, 2018

Due in1 Yearor Less

Cash and cash equivalents
Receivables
Debt securities¥ 20,391
22,736300

Total¥ 43,427

Millions of Yen
Due after
Due after
1 Year
5 Years
throughthrough
5 Years
10 Years

Due after
10 YearsThousands of U.S. Dollars
Due after
Due after
1 Year
5 Years
throughthrough
5 Years
10 Years

Due after
10 Years

March 31, 2017
Cash and cash equivalents
Receivables¥ 24,791
17,393Total¥ 42,184

Due in1 Yearor Less

March 31, 2018
Cash and cash equivalents
Receivables
Debt securities$ 192,368
214,491
2,830

Total

$ 409,689- 26 -

14.

DERIVATIVESThe Group enters into derivative contracts, including foreign currency forward contracts, to hedge foreign exchange
rate risk associated with certain assets and liabilities denominated in foreign currencies.
All derivative transactions are entered into to hedge foreign currency exposures incorporated within the Group'sbusiness. Accordingly, market risk in these derivatives is basically offset by opposite movements in the value ofhedged assets or liabilities.
Because the counterparties to these derivatives are limited to major international financial institutions, the Group
does not anticipate any losses arising from credit risk.
Derivative transactions entered into by the Group have been made in accordance with internal policies that regulate
the authorization and credit limit amount.
Derivative Transactions to Which Hedge Accounting Is Not Applied
Derivative transactions to which hedge accounting is not applied at March 31, 2018 and 2017, were as follows:

Contract
AmountMillions of Yen
Contract
AmountDue after
Fair
1 Year
Value

¥949

¥ 35

¥ 35

¥ 1,491

¥ 18

¥ 18

March 31, 2018

Contract
AmountThousands of U.S. Dollars
Contract
AmountDue after
Fair
Unrealized
1 YearValue
Gain/Loss

Foreign currency forward contracts—
Selling Euro$ 8,953$ 330

March 31, 2018
Foreign currency forward contracts—
Selling Euro

Unrealized
Gain/Loss

March 31, 2017
Foreign currency forward contracts—
Selling Euro$ 330

The fair value of derivative transactions is measured at the quoted price obtained from financial institutions.

- 27 -

15.

OTHER COMPREHENSIVE INCOME (LOSS)
The components of other comprehensive income and loss for the years ended March 31, 2018 and 2017, were as
follows:

Millions of Yen
2018
2017
Unrealized gain on available-for-sale securities:
Gains arising during the year
Amount before income tax effect
Income tax effectTotal
Foreign currency translation adjustments:
Adjustments arising during the year
Amount before income tax effect
Total
Defined retirement benefit plans:
Adjustments arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effectTotal
Total other comprehensive income
16.

Thousands of
U.S. Dollars
2018

¥ 736
736
(268 )¥ 5,027
5,027(1,491 )$ 6,943
6,943(2,528 )¥ 468¥ 3,536$ 4,415¥ 278
278¥ (379 )(379 )$ 2,623
2,623

¥ 278

¥ (379 )$ 2,623

¥ 60
132
192
(23 )

¥ (107 )
142
35
14

$

¥ 169

¥

49

$ 1,594¥ 915¥ 3,206$ 8,632

566
1,245
1,811
(217 )SUBSEQUENT EVENT
The following appropriation of retained earnings at March 31, 2018, was approved at the board of directors'
meeting held on May 15, 2018:

Year-end cash dividends, ¥45 ($0.4) per share
17.

Millions of Yen

Thousands of
U.S. Dollars¥ 959$ 9,047

SEGMENT INFORMATION
Under ASBJ Statement No. 17, "Accounting Standard for Segment Information Disclosures," and ASBJ Guidance
No. 20, "Guidance on Accounting Standard for Segment Information Disclosures," an entity is required to reportfinancial and descriptive information about its reportable segments. Reportable segments are operating segments oraggregations of operating segments that meet specified criteria. Operating segments are components of an entity
about which separate financial information is available, and such information is evaluated regularly by the chief
operating decision-maker in deciding how to allocate resources and in assessing performance. Generally, segment
information is required to be reported on the same basis as is used internally for evaluating operating segment
performance and deciding how to allocate resources to operating segments.

- 28 -

(1) Description of Reportable Segments
The Group is primarily engaged in the manufacture, development, and sale of visual products and related products. The Group consists of this single industry, and therefore, it is not
required to disclose separate financial information by segment.
(2) Information about Products and Services

Sales to external customers

Sales to external customers

Sales to external customers

Business&
Plus

Healthcare

Creative
Work

Millions of Yen
2018
Vertical&Specific¥ 18,111¥ 29,780¥ 5,749¥ 7,885¥ 15,234¥ 7,299¥ 84,058

Amusement

Other

Total

¥ 18,409¥ 4,527¥ 78,284

Other

Total

$ 68,859$ 793,000

Business&
Plus

Healthcare

Creative
Work

Millions of Yen
2017
Vertical&Specific¥ 16,822¥ 26,098¥ 5,471¥ 6,957

Amusement

Other

Total

Business&
Plus

Healthcare

Thousands of U.S. Dollars
2018
VerticalCreative&
Work
Specific
Amusement$ 170,858$ 280,943$ 54,236$ 74,387$ 143,717

Note: Three reportable segments ("Visual Display Systems," "Amusement Monitors," and "Other") were changed to six reportable segments ("Business & Plus," "Healthcare," "Creative
Work," "Vertical & Specific," "Amusement," and "Other") from the current fiscal year. Sales disclosure information in the previous financial year was adjusted for comparative
purposes.
(3) Information about Geographical Areas(a) Sales

Japan

EuropeMillions of Yen
2018
North
America¥ 44,405¥ 30,057¥ 5,810¥ 3,786¥ 84,058

Japan

EuropeMillions of Yen
2017
North
America

Other

Total

¥ 44,123¥ 25,699¥ 5,322¥ 3,140¥ 78,284- 29 -

Other

Total

JapanEuropeThousands of U.S. Dollars
2018
North
America$ 418,915$ 283,557$ 54,811

Other

Total

$ 35,717$ 793,000

Note: Sales are classified by country or region based on the location of customers.
(b) Property, plant, and equipment
The amount of property, plant, and equipment located in Japan exceeds 90% of the amount of property,
plant, and equipment in the consolidated balance sheet, and thus, there is no requirement to disclose such
geographic information.
(4) Information about Major Customers

Name of Customers

Millions of Yen
2018
Sales

JT Japan Technicals¥ 21,019

Name of Customers

Millions of Yen
2017
Sales

JT Japan Technicals¥ 21,841

Name of Customers

Thousands of
U.S. Dollars
2018
Sales

JT Japan Technicals$ 198,292******- 30 -